Kindle Fire Grabs Large Slice Of Tablet Market

For the past couple of years we’ve been waiting for a tablet to come along and challenge the dominance of the iPad, and we may finally be seeing it happen.

The Kindle Fire went on sale in the US last month and is already far and away the biggest selling Android tablet with almost three times the sales of its closest rival. However its sales pale into insignificance compared to the well-established iPad.

IHS has released preliminary tablet sales figures for the fourth quarter of 2011 and it shows that the Amazon Fire has snagged 13.8 per cent of the market rising from nothing the quarter before. While the Samsung Galaxy Tab 10.1 is well behind in third with 4.8 per cent, both seem puny when compared with Apple’s 65.6 per cent share of the market - though this has dropped from 69.7 per cent in the previous quarter.

Considering however that the Kindle is still only available in the US and has only been on sale for two weeks, it is a remarkable achievement. The attraction of the 7in Amazon tablet is not so much in the hardware, which is nothing to write home about, but the content which is available as well as the low price of $199.

Amazon is making a slight loss (around $2) on each Kindle Fire it sells, but hopes to recoup that lost revenue by getting customers to purchase a lot more content than other tablet owners might buy. It is a similar business model to the Kindle e-reader and one which until now has worked remarkably well.

“Initial market response strongly suggests that Amazon, with the Kindle Fire, has found the right combination of savvy pricing, astute marketing, accessible content and an appropriate business model, positioning the Kindle Fire to appeal to a brand-new set of media tablet buyers. The production plans make it clear that Amazon is betting big on the product,” said Rhoda Alexander, senior manager, tablet and monitor research for IHS.

Somewhere in the region of 65 million tablets are now expected to ship in 2011 which represents 273 per cent growth from 17.4m in 2010.

"While Amazon's Kindle Fire has come out of the gates strong, as expected," said Robert Cihra, an analyst with Evercore Partners, "we see Apple maintaining its competitive lead, if anything accentuated by what now looks like the only tablet to so far mount any credible iPad challenge apparently needing to do so by selling at cost."

We await a release date for the Kindle Fire on this side of the world, but do you think it will be as successful here as it has been in the US? Let us know in the comments.